A short break from the FAFSA… In late September, the Fed released data from its most recent Survey of Consumer Finances. This survey is completed every 3 years with the goal of helping “the government and, ultimately, the public at large understand the financial condition of families in the United States and to study the effects of changes in the economy.” The survey covers a range of financial topics including savings, borrowing, business ownership, investment, use of financial institutions, pension coverage and more.

This year’s survey results show an overall increase in the percentage of families with some form of debt (from 74.5% in 2013 to 77.1% in 2016), but a decrease in both median (from $62,300 to $59,800) and mean ($126,100 to $123,400) value of debt.

While a decrease in debt sounds like good news, there are two important caveats to that:

  • A big part of the decrease in overall debt owes to a continuing downward trend of homeownership, since mortgage debt tends to be the largest portion of household debt. Ownership of a primary residence fell from 65.2% of families in 2013 to 63.7% in 2016. This rate has been declining since the 2004 Survey, at which time the homeownership rate was 69.1%.
  • The primary debt category seeing an increase was education debt, with 2% more families holding education debt and both mean and median debt levels increasing by 15% from 2013 to 2016.

Here is the report’s table on debt:

FRB SCF chart

The survey does not report any correlation between increases in student debt and decreases in home ownership rates; however, a recent report by the New York Fed does connect these dots.